How The House And Senate Bills Affect Higher Ed

Dec 8, 2017
Originally published on December 8, 2017 11:21 am
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DAVID GREENE, HOST:

As the House and Senate iron out a tax plan, the nation's 20 million college students are waiting to see how it might affect them, as are the schools they attend. The plan is likely to touch everything from financial aid to research funding at both public and private institutions. For more, we turn to Anya Kamenetz from the NPR Ed team. Hey, Anya. Thanks for coming on.

ANYA KAMENETZ, BYLINE: Thanks so much, David.

GREENE: So let me start - if I am a college student - God, I wish I were still a college student some days...

(LAUGHTER)

GREENE: If I'm a college student, what should I be worried about as I look at these tax bills?

KAMENETZ: So the House bill takes aim at about $6.5 billion dollars' worth of tuition and education tax benefits that students and families currently have. That's according to the American Council on Education. One part of this is the way that graduate students currently pay for higher education. They typically get waivers on their tuition in exchange for research or teaching. And this bill would treat those waivers as income.

GREENE: Oh, wow.

KAMENETZ: Yeah. So it could be taxed. So let's say, you know, I could be a grad student, a Ph.D. student surviving on a $15,000 stipend. And I get a $40,000 tuition waiver. Now I'm paying income tax on $55,000 worth of supposed income that I'm getting.

GREENE: OK. So that could change things dramatically for a graduate student. What about undergrads?

KAMENETZ: Well, the House bill also takes aim at other education tax benefits that parents can use to pay tuition and also that graduates can use to pay off their student loans.

GREENE: What other provisions are catching the attention of people involved in higher ed?

KAMENETZ: Both the Senate and House bills currently are getting rid of the state and local tax deduction.

GREENE: Oh, we've heard about this from lawmakers, even Republicans who are in high-tax-paying states, who have said, you can't do that. Their residents really rely on these deductions that they can make.

KAMENETZ: Right. That's exactly right. So in a higher-tax-burden state like New York City, where I live - the New York City taxes, New York state taxes - I can take them off of my federal taxes. And this elimination would make it harder for me to do that. And so it's a higher tax hit for people, especially in high-tax states. And that in turn potentially puts a squeeze on state revenues. And public higher education would be one of the potential victims of that squeeze.

GREENE: The squeeze you're talking about is because there might be a lot of complaints and pressure for these states to lower their taxes. And that would mean collecting less at some point and not having as much in their budgets.

KAMENETZ: That's exactly right.

GREENE: So there has been talk, as well - and help me understand this - that private colleges might be targeted by these piece of legislation. Why would that be?

KAMENETZ: So there's a provision here to tax investment gains for the endowments of private colleges. And so this would tax those for the first time. But all across the higher-ed world, there's a lot of concern about this because it's impinging on the previous non-profit status of higher education and potentially imperiling, you know, the ability of some of these universities to do the lifesaving research that they do to teach undergraduates and become more diverse. And essentially, the higher education world fears that it sets a precedent.

GREENE: Are there politics at play here in some way?

KAMENETZ: You know, there does seem to be a culture war aspect to these higher-ed cuts in particular in the tax bill. Stephen Moore, a conservative economist Trump adviser - I believe you've had him on your program...

GREENE: Yeah.

KAMENETZ: ...He told Bloomberg that they are going after university endowments because universities have, quote, "become playpens of the left." And a recent Pew poll underscores this. There's a sharply rising partisan gap on higher education. Fifty-eight percent of Republicans told Pew that colleges have a negative effect on the country. And 72 percent of Democrats on the other side said, no, colleges have a positive effect on the country. So that's a very large divergence.

GREENE: That's an interesting backdrop to all of this. Anya Kamenetz, thanks so much.

KAMENETZ: Thank you, David.

GREENE: She's from NPR's Ed team.

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